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Minnesota Gov. Mark Dayton unveils his tax and spend plan for the next two years on Tuesday, Jan. 22, 2013. His plan mixes spending cuts and increases, along with tax cuts and increases.
Forum News Service photo by Don Davis

ST. PAUL -- Minnesotans would pay taxes on clothing worth more than $100, rich Minnesotans' income tax would increase and property taxes would fall under a proposal released by Gov. Mark Dayton at mid-day.

The Democratic governor proposes tax increases more than $2 billion, to be used to pave over a $1.1 billion budget deficit and increase spending for education and jobs programs.

Key to the Dayton budget is increasing taxes on the top 2 percent of Minnesota earners. For instance, that would up taxes on 883 people in St. Louis County, 128 in Beltrami County, 185 in Clay County, 258 in Kandiyohi County, 94 in Nobles County, 234 in Goodhue County, 2,858 in Washington County, 185 in Douglas County, 67 in Hubbard County and 72 in Stevens County.

"The result of these changes in the income tax, sales tax and property tax would be to reduce the total state and local taxes paid by most Minnesotans," Dayton said in remarks prepared for delivery as he released his budget plan.

While Dayton said the budget plan is the beginning of discussion about taxing and spending, legislative Republicans and Democrats agree the two-year budget for the cycle beginning July 1 will be build off the Dayton proposal.

Dayton's fellow Democrats control the Legislature, and while they say there will be some disagreements with what Dayton wants, they generally agree with his ideas, especially raising taxes on the rich.

His plan calls for increasing taxes for couples earning more than $250,000 a year and individuals with $150,000 incomes.

Republicans strongly disagree, saying such taxes will stymie economic development. However, they admit that Democrats can pass whatever budget they want. Republicans only have a say in funding public works projects, which require more than a simple majority to pass.

Public works projects, funded by the state selling bonds, were not included in today's budget plan. However, a proposal is expected later in the year.

Dayton would raise $2 billion via the sales tax, but keep clothing items less than $100 tax free. However, a variety of other goods and services not now affected would be taxed under the governor's plan.

He also calls for increasing cigarette and tobacco taxes while reducing corporate taxes by 14 percent. He also would reduce a statewide business property tax.